Friday, March 30, 2012

Making mountain out of ant-hills [up-dated]

The recent loss of breadmaking company, Silver Bird Group Berhad (Silver Bird) started a political debate that stretch the political border into Riau and from fact to fiction and slander.

From the initial intention by some group to discredit the rebelious Koperasi Felda Berhad (KPB), Nurul Izzah dragged Lembaga Tabung Haji (TH) into the foray.

Husam Musa stretched his imagination into a slanderous statement of TH selling it's plantation in Riau to an opposition's crony in a hurry to cover for BN's delayed Felda Global Venture (FGV) listing.

If an explanation is seek for, Husam should not have been too detailed. It is obvious that Pakatan Rakyat, destroyer of nation-building are on to another psywar attack on another Government institution: Tabung Haji.

If they intend to make mountain out of anthills, TH should be firm and just sue these buggers. It is not worth the trouble to get dragged in a political slugfest. Learn from Felda.

Silver Bird

It started out from a news report of a failed investment by Koperasi Felda Berhad (KPB) in a bakery, Silver Bird Group Berhad.

This bakery had it’s origin in the old Federal Bakery that produced Sunshine brand bread out of it’s bakery at a roundabout in Sungai Besi. It was suffering from sagging sales from new competition and a new group tookover.

They changed the product line from the old artisan bread for a new nutritious product branded as High 5 to address the health concerned market.

In 2006, their Stanson bakery in Nilai Negeri Sembilan it’s halal status withdrawn due to unhygiene condition of the factory. It was splashed in all the newspapers.

The image of this Chinese run bakery in a poor state of hygiene could have ended the company if not rescued by Lembaga Tabung Haji (TH). Despite the negative news and poor hygiene condition, it was an opportunity for TH to enter the lucrative bakery business through an existing bakery with an established distribution.

TH involvement help to address the negative perception. The company then moved out from the problematic Stanson bakery to a new bakery in Shah Alam. Management remained with the original Chinese owner, Pengarah Urusan Kumpulan Silver Bird Group Datuk Jackson Tan Han Kook, in whom the management and technical expertise lies.

The problem for High 5 was that it was competing against Gardenia, the fast growing bread and has attain a dominating market share with it’s tasty “you can eat it on it’s own” bread. On the hindsight, another problem was the management refused to get out of the High 5 brand.

By the time it picked up steam, Gardenia was dominating every other retail outlets. Strangely, the bread market turned inelastic and did not response to the lower priced High 5 breads.


Politics came in.

TH is one of the last Government institution not picked on by the opposition, who has only spared the Malay rulers institution from criticism, lies and slanders, but they have indirectly done so with their kurang ajar conduct .

Nurul Izzah issued a statement on March 21st 2012. Read here on Anwar Ibrahim blog. She demanded an investigation on TH questionable investment. Out of hundreds of TH investment, she could only produce Silver Bird and Ramunia as examples.

According to Nurul, Silver Bird was designated a PN17 status by Bursa Malaysia since February 29, 2012. So what?

TH invested in 2006. It had undergone due process with the Investment Panel. The Investment Panel was established in 2001 to review existing and future investment by TH. That panel is still in existence and remained relevant and properly run.

Nurul added that TH is one of the largest shareholders with 22.19% and is exposed to an estimated RM111.5 million financial shortfall. Can Nurul be more accurate as to what is TH’s potential loss and if there is any contingent liabilities?

As compared to the estimated total fund under management of RM30 billion, the exposure of apportioned RM24.74 million is only 0.082% of fund under management and can have an impact of 1.375% on RM1.8 billion dividend payout.

However, RM24.74 million cannot be TH exposure for it must be the amount TH invested in 2006 or any subsequent recapitalization. It is likely to be less and it’s impact diluted in the portfolio. The real lose is still not realised and need to be ascertain. After deducting asset, it is likely to be lower.

So what is the significant?

This is part and parcel of portfolio investment management. Lose some, win more and one come out winner. But do not make the novice comparison to Bank Rakyat’s smaller portfolio return. It appeals to the sentiment of orang kampung but it does not make investment sense when considering TH manages a RM30 billion portfolio with consistent over a very long time.

Can Bank Rakyat do it year in year out without drastic losses along the way? Don't forget Bank Rakyat had it's fair share of financial crisis and scandal.

Riau Slander

Seeing Nurul initiative in attacking TH, the ADUN for Salor Kelantan, Husam decided to take a crack at it too.

While he claimed he was merely seeking explanation on rumour of TH selling out it’s 83,000 hectare plantation in Riau Island, Indonesia to Robert Kuok in a hurry, the manner he asked was not of seeking of information but meant to slander TH.

He wanted to be better than novice politician. Nurul.

Despite not making any sense, Husam gave detailed account of some figures and the story to the point of making an accusation that the sales had relation with Government’s delayed plan to list Felda Global Venture and TH plantation is for BN to fund election.

Now that is serious accusation.

See the video below by PAS TV that was given title by you tube owner, tvpas09 as “Tabung Haji jual lading di Riau kepada kroni?”:

In the first place, Robert Kuok is no crony. He maybe seen on the Board of Advisory of Islandar Regional Development Authority (IRDA) but he is a crony of the opposition.

Kuok’s company entry into the bread market was using racial sentiment and riding on the DAP network to ask Chinese to boycott the also Chinese managed but Bernas controlled, Gardenia.

Harakahdaily published two reports on Husam statement. See below:

Robert Kuok beli ladang sawit Tabung Haji di Riau?

Hazayani Zakaria

KUALA LUMPUR, 28 Mac: Pakatan Rakyat memohon penjelasan kerajaan berhubung dakwaan bahawa Tabung Haji akan menjual ladang kelapa sawitnya seluas 83,000 hektar di Riau, Indonesia.

Naib Presiden PAS, Datuk Husam Musa (gambar) berkata, langkah tersebut dibuat dalam keadaan tergesa-gesa dan menimbulkan kecurigaan.

"Tindakan ini mencurigakan kerana tidak ada penjelasan daripada Tabung Haji dan Jabatan Perdana Menteri kenapa aset yang begitu berharga dijual dalam keadaan terdesak," kata beliau pada sidang media selepas mesyuarat Majlis Pimpinan Pakatan Rakyat di Bangunan Parlimen hari ini.

Menurut Husam, penjualan ladang tersebut akan menjejaskan caruman pencarum Tabung Haji yang majoriti terdiri daripada orang Islam.

Ketika ini, ladang tersebut memberikan pulangan sejumlah RM3juta sehari kepada Tabung Haji.

"Kami difahamkan langkah penjualan ini dibuat secara tergesa-gesa kepada satu syarikat yang dimiliki Tan Sri Robert Kuok," katanya yang juga Exco Kerajaan Negeri Kelantan.

Beliau juga tidak menolak langkah ini diambil setelah usaha menyenaraikan Felda Global Ventures Holdings Sdn Bhd (FGVH) ke Bursa Malaysia tergendala.

"Kami berpandangan ini langkah terdesak BN untuk cash out aset-aset yang dimiliki oleh agensi atau perbadanan melibatkan kepentingan negara dan orang ramai.

"Dan ini mungkin langkah kedua setelah langkah mereka dalam penyenaraian FGVH tergendala," katanya.
Versi Inggeris berikut:
Now, Tabung Haji's sale of lucrative oil palm estate questioned

Harakahdaily, 29 March 2012

Mar 29: Tabung Haji's sale of an asset which has been generating some RM3 million daily revenue is the latest to come under spotlight in a series of what critics say is the national Hajj fund's bad business decision-making.

Tabung Haji recently disposed 83,000 hectares of oil palm estate in Riau, Indonesia, prompting PAS vice president Husam Musa to question the move.

“There has been no explanation from Tabung Haji or the Prime Minister’s Department on why such a valuable asset was sold with such desperation,” the Kelantan exco member said.

He warned that the sale of the estate would affect the savings of Tabung Haji members, adding that he was made to understand it was bought by a company linked to Malaysian 'sugar king' Robert Kuok.

Husam also did not dismiss speculation that the move was taken after Felda Global Venture Holdings’s plan to be listed on Bursa Malaysia this year was met with obstacles.

According to him, Barisan Nasional was desperate to generate cash by selling off assets owned by agencies or statutory bodies despite involving public interest.

"This may be the alternative plan after their plan to list FGVH was obstructed,” he said.

Last week, Lembah Pantai member of parliament called for an independent probe into the Hajj fund board's investment activities.

"The pattern of consistent investment failures have led to the questioning on the integrity investment decision making made, especially a concern for all LTH depositors. Immediate and decisive action must be taken to allay depositors fear and doubts on the viability of LTHs investments," she said.
Kaki Saman

The two Harakahdaily reports have gone viral.

The reports were fed into the opposition psywar machinery in cyberspace for propagation. Clearly, the reports, particularly the English version, are unsubstantiated accusation with well intention to slander TH.

It means Husam and Harakah are liable and it is not difficult to proof.

This is interesting because amongst pro-UMNO bloggers, they are saying that Husam Musa is a mad serial kaki saman.

He is likely to lose a case against someone claimed to be blog owner of RBF and is in the midst of one against Kickdefella. He is said to have served summon on few bloggers.

Watch out bloggers and media.

Yet, here he is making liable slander against a trust and business corporation. What a hypocrite! Isn’t he stretching his politics outside it’s realm?

TH should not answer his allegation but just straight and sue him. From his case in Kota Baru, it can be concluded that he has novices representing him in court.

Proof and Business Sense

Husam claimed that TH recently disposed off 83,000 hectares of plantation land to Robert Kuok and this will result in deficiency of RM3 million cashflow generated to TH. We sure could lend the lawyers of TH a hand.

Can Husam produce a news report to show Wilmar or any of Robert Kuok’s corporate vehicle buying plantation from TH in Riau? Robert Kuok only do business through companies, particularly public listed companies. There must be official announcement.

Where is it?

Thus far, TH has announced quite recently a JV with a China company to build a CPO refinery for the China market. Now, why would TH want to sell their plantation if they are building a CPO refinery plant in Riau?

Stupid isn't it? Perhaps it is the sort of thing PMBK Sawit Sdn Bhd would do, but not professionally run outfit like TH.

If TH wish to sell the Riau plantation, it does make business sense.

Indonesia has a funny land law and after investing in preparing the land, it could end up being owned by some local bumpkins. Many Malaysian fell for that trap. TNB go tricked in their coal venture in Kalimantan in that manner.

Husam wouldn't know, would he?

Turning the Table

Now, where did Husam came up with the number RM3 million daily cash generated.

Looks like the Chairman of PMBK Sawit is not even sure if it is cash or another proper term, cashflow and if it is generated for TH’s or the plantation company’s. Wonder where did he get his education?

PAS politicians are usually hopeless in articulating economics and business matter. Remember Ssalahuddin Ayub allegation that MAS lost RM8 billion during Tan Sri Tajuddin tenure as Chairman.

And imagine, Husam who claimed to have a degree in Economics from University Malaya, is said to be a financial genius and future Finance Minister.

God save Malaysia!

Let’s assume it is revenue and cashflow for the plantation company. At RM3million per day on the 83,000 hectare plantation in Riau, it translates to an average revenue of RM1,095 billion per year or RM13,192 per hectare per year or 18.8 ton per hectare annually.

Did Husam used PMBK Sawit as his yardstick?

The average tonnage per hectare over 25 years cycle of oil palm for any well maintained plantation is 20 ton per year. Over the 25 years, it can peak and trough from the highest recorded at 28 to the low of around 16. For plantations like IOI, Kepong and UP, it is said to have an average 22 ton per year.

At 20 ton per hectare year multiplied by say, RM700 per ton, that will generate revenue per hectare of RM14 million a year or daily per hectare of RM38,356. If that is the productivity, the Riau plantation could generate daily of RM3.183 million.

Through either way, if PMBK plantation production figure used as yardstick, then PMBK Sawit is performing poorly and way below the industry practice.


The Kelantan people should ask if there is any leakage in PMBK Sawit operation that could have resulted in poor financial performance. If there is, Husam should be investigated and sacked should there be anything questionable of the operations.

His latest politically motivated statement made him liable to lawsuit by TH and that could render him as not qualified to run as candidate for public office in the general election.

Nik Aziz should consider not to allow him to run at all if he could end up as bankrupt and end up relinquishing his post. It will cause major embarrassment to the state Government.

If he can pay TH, ask where did he get the money.

It is heard that he had an out-of-court settlement with Khairy. Wonder how did he paid Khairy Jamaluddin?


We were told that Tabung Haji had received an offer from an Indonesian company for 95% interest.

Harakah is still at it. Read here.

This time they are quoting from MSO Melayu blog.

What does political writer, Mohd Sayuti Omar know about the business of oil palm plantation and what more, overseas palm oil plantation?

“Perkara ini perlu didedahkan kerana ia melibatkan kepentingan penyimpan Tabung Haji termasuk saya, isteri dan ibu,” he wrote.

He may have a small few acres of oil palm, but does he has basic knowledge on the management of oil plam plantation and more so on Indonesian palm oil plantation in Riau to enable him to comment. Can he interpret what the offer of US$900 million means?

He can probably spin well.

But the problem is PAS supporters think their leaders and supporter-writers know it well.


Anonymous said...

Politically, in the past 4 years, Husam is slowly showing that he is not more than an anthill and not a mountain as when he first came into the picture of Kelantan politic.

Unlike a mountain, his master/s can step on this anthill whenever they want.

He's not in the same class as other typical Kelantan warlord/leader like Ku Li, Ibrahim Ali and Nik Aziz.

Anonymous said...

During my career days of working in a bank and dealing with loan financing, we had a lot of problems with Tabung Haji as far as its investments is concern.Most of its joint venture deals that we had supported are either dead , half dead, in the brink of a fallout or gone kaput. Even we thought that Tabung Haji needs to be revamped because it has political masters that are not interested in making TH profitable but only to make money out of any JV.

Anonymous said...

Tabung Haji has confirmed the sale of its Indonesia plantations. So now who is lying?

Tabung Haji to sell 95% stake in Riau plantation for RM2b
Tuesday, 03 April 2012 09:27 Siti Radziah Hamzah

Lembaga Tabung Haji (TH) has conditionally accepted a proposal from an Indonesian-based company to acquire 95% of its equity interest in PT TH Indo Plantations (THIP), according to a spokesperson from TH.

THIP is estimated to be worth RM2.3 billion, which includes 83,879ha of plantation land, one kernel crushing plant, six palm oil mills and one biomass plant in the province of Riau, Indonesia.

If the deal goes through, TH is expected to make at least RM2.19 billion, which is to be satisfied via cash payments.

It is understood that TH is actually discussing a price of above the market valuation of RM2.3 billion to sell the assets and has principally approved the deal.

“The board of TH has principally approved the deal, subject to regulatory approvals from the Indonesians,” said the spokesperson, declining to reveal the identity of the Indonesian buyer.

In a statement recently, TH group managing director/chief executive officer Datuk Ismee Ismail said TH had received the proposal in February 2011.

“TH expects to utilise the proceeds from this divestment to be invested in other plantation assets.

Plantation will continue to be one of the main investments sectors in TH, taking into consideration its steady cashflow and long-term prospects.

“We believe that the offer received provides a good opportunity to realise the appreciation in value of its investment in THIP,” he added.

THIP owns and operates 83,879ha of oil palm plantations since 1997.

Compared to the value of its initial investment, the offer received will provide a favourable return on investment.

“Transactions such as this will definitely benefit our depositors directly,” Ismee said.

He added that TH will continue its efforts to manage its investment responsibly in the best interest of its seven million depositors, while ensuring competitive returns.

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